How Much Does a Loan Officer Make Per Loan? A Deep Dive Into Commission

If you’ve ever worked with a loan officer to secure financing for a major purchase like a home or car, you may have wondered – how much does this person actually make off my loan? Loan officers typically earn a combination of salary and commissions based on the deals they close. But exactly how commission pay structures work can seem opaque from the borrower’s perspective.

In this in-depth look at loan officer pay, we’ll demystify how much these professionals earn per funded loan. Whether you’re considering a career as a loan officer yourself or just want to understand how your loan officer gets paid, read on for key details on average base salaries, commission rates, bonus opportunities, and factors that impact earnings per loan.

Loan Officer Pay Overview

Loan officers are commissioned sales roles who guide borrowers through the loan application process and shepherd loans to closing. They work for banks, credit unions, mortgage companies, and other lending institutions. According to the Bureau of Labor Statistics, the average national salary for loan officers is $80,570 per year. However, most earn additional income from commissions.

Here are the main components of a loan officer’s total compensation

• Base salary – Typically $30000-$60.000 per year covering reliable income between commissions

• Commission – Percentage of the loan amount funded, paid at closing

• Bonus – For meeting volume, revenue, or quality goals

• Benefits – Health/dental insurance, 401(k) matching, paid time off, etc.

The base salary provides steady income, while commissions and bonuses reward loan production. High performers can earn well into six figures.

How Loan Officer Commission Structures Work

Loan officer commission is calculated as a percentage of the loan amount for each loan closed and funded. Here are some key details on how commission structures work:

• Commission rates typically range from 0.5% to 2% of the loan amount.

• Rates vary by loan type, lender, experience level, and production volume.

• The higher the loan amount, the more earned in commission.

• Commission is paid after the loan funds and closes.

• Most lenders pay commission as a tiered rate, with higher percentages paid on higher loan volume tiers.

• Commission may be reduced by certain fees on the loan.

As an example, on a $300,000 home loan with a 1% commission rate, the loan officer would earn $3,000 in commission on that single transaction.

Factors That Impact Earnings Per Loan

While the loan amount itself determines commission, several other factors impact how much a loan officer makes on each individual loan:

Loan type – Mortgages pay higher commissions than consumer loans.

Experience level – Junior loan officers may start around 0.5% commission.

Lender pay structure – Large banks pay less than small lenders.

Loan fees – Fees may be deducted from total commission.

Non-commission bonuses – Signing bonuses or monthly volume bonuses can supplement per-loan earnings.

Loan volume – Higher monthly volume moves loan officers into higher commission tiers.

Repeat business – Reusing existing clients provides more high-value referrals.

Credit profile – Borrowers with excellent credit secure larger, more profitable loans.

Real estate markets – Loans in high-cost markets earn higher commission for the same effort.

To maximize commission potential, successful loan officers focus on high-balance purchase mortgages in their market’s pricey neighborhoods for clients with strong credit.

Estimating Total Loan Officer Pay

While individual commission per loan fluctuates, we can develop estimates of total potential loan officer pay based on average production statistics. Let’s look at hypothetical annual earnings for loan officers at different production levels:

Rising Star

• Monthly Volume: 8 loans

• Average Loan Amount: $250,000

• Commission Rate: 0.85%

• Annual Loan Volume: 96 loans

• Total Annual Loan Value: $24 million

• Annual Commission (@0.85%): $204,000

• Est. Total Earnings: $75,000 base + $204,000 commission = $279,000/year

Top Producer

• Monthly Volume: 25 loans

• Average Loan Amount: $400,000

• Commission Rate: 1.25%

• Annual Loan Volume: 300 loans

• Total Annual Loan Value: $120 million

• Annual Commission (@1.25%): $1.5 million

• Est. Total Earnings: $100,000 base + $1.5 million commission = $1.6 million/year

By dedicating themselves to nurturing client relationships, optimizing sales tactics, and pursuing only the most profitable loans, top producers at name-brand lenders can comfortably earn over $1 million per year.

Should You Become a Loan Officer?

If helping clients realize their dreams of homeownership or entrepreneurship motivates you, a career as a loan officer can provide rewarding work along with substantial earning potential over time. Consistently sourcing new deals and mastering changing mortgage regulations pose challenges, but mortgage lending offers viable long-term career paths for goal-oriented, entrepreneurial professionals.

The next steps if interested are to research top area lenders, polish your sales abilities, and consider formal coursework to prepare for state mortgage licensing exams. This in-depth look at loan officer commission structures provides the compensation insight to help determine if this sales-driven financing career is the right fit for you.